Chapter 25 notes Flashcards
statements on standards for accounting reviews(SSARS)
issued by the accounting and review services committee of the AICPA
a review services SSARS review
engagement allows the accountant to express limited assurance that the financial statements are in accordance with the applicable accounting standards
procedures suggested for reviews
evidence for a review is primarily of inquiries of management and analytical procedures, must obtain evidence
evidence for reviews
obtain knowledge of the accounting principles and practices of the clients industry obtain knowledge of the client make inquiries of management perform analytical procedures read the financial statements obtain letter of representation prepare documentation
form of report
1st paragraph: intro 2nd paragraph: specifies management is responsible for fs 3rd paragraph: notes responsibility of accountant 4th paragraph: expresses limited assurance
failure to follow applicable accounting
report should disclose the effects of the departure as determined by management
compilation service
where accounts obtain financial information, but don’t provide any assurance on it
requirements for compilation
establish an understanding of the client in a written engagement
possess knowledge about the accounting principles and practices of the clients industry
know the client, including a general understanding of their industry
make inquiries to determine whether the info is satisfactory
read the complied financial statements and be alert for obvious omissions or errors
prepare documentation in sufficient detail to provide a clear understanding of the work performed
types of compilation reports
- compilation with full disclosure
- compilation that omits substantially all disclosures
- compilation without independence
parts of a compilation
report title
date of the report is the date of completion
each page of fs should state see compilation report
if client fails to follow accounting standards, auditor must include the same modifications in the compilation report that are used in a review report
public company interim review
requirements
- obtain knowledge of the accounting principles of the clients industry
- obtain knowledge of the client
- make inquiries of management
- perform analytical procedures
- obtain a letter of representation
attestation engagements
the CPA reports on the reliability of info or an assertion made by another party
statements on standards for attestation engagements
issued by AICPA for attestations
three levels of attestation engagements
- examinations
- reviews
- agreed upon procedures
examination
results in a positive conclusion expressed in an opinion
review
provides a moderate level of assurance that is expresses in a negative assurance conclusion
agreed upon procedures
all procedures the CPA will perform are agreed upon by the CPA firm and the recipient of the report
webtrust
a client engages a CPA to provide reasonable assurance that a company's website complies with certain trust services principles security availability processing integrity privacy confidentiality
systrust
evaluation of a computer system
prospective financial statements
predicted or expected financial statements in some future period or date two types forecasts projections for general or limited audiences
forecasts
present an entity’s expected financial position to the best of the responsible party’s knowledge
projections
present an entity’s expected financial position to the best of the responsible party’s knowledge based on one or more hypothetical assumptions
examination of prospective financial statements
- evaluates the preparation process
- evaluates support
- evaluates the presentation of the fs for conformity with AICPA
- issues an examination report
other comprehensive basis of accounting
cash or modified cash basis
basis used to comply with the requirements of a regulatory agency
income tax basis
a definite set of criteria having substantial support
